Tech Stock Valuation

FIRM SIZE EFFECTS 149

and more uniformly positive stock-price effects are noted in the case of R&D

intensity. In the nonmanufacturing sector, the weakly positive effect of advertis-

ing intensity on Tobin’s q is not statistically significant using conventional

criteria. In terms of consistency and statistical significance, R&D emerges more

so than advertising as a positive long-term influence on Tobin’s q. In contrast with

some popular assumptions that stock market investors are myopic in their focus

on short-run performance, these findings suggest that investors evaluate the

advertising and R&D efforts of firms with an appropriately long-term perspective. ...